New tax dispute resolution directive takes effect

A new directive on tax dispute resolution mechanisms in the EU came into force on 1 July 2019. It will help to find solutions for tax disputes between member states that can arise from the interpretation and application of international agreements and conventions providing for the elimination of double taxation. Estimates show that 2 000 such disputes are currently pending in the EU out of which about 900 are more than two years old.

The mechanism will ensure that businesses and citizens can resolve disputes related to tax treaties more swiftly and effectively in particular those related to double taxation – a major obstacle for businesses and individuals that creates uncertainty unnecessary costs and cash-flow problems. It also introduces more transparency on tax disputes in the EU.

The directive applies to disputes for tax years beginning on or after 1 January 2018. It introduces a mutual agreement procedure for resolving disputes...